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Sunday October 21, 2018
2018 Flexible Spending Arrangements
In IR-2017-187, the IRS urged employees with flexible spending arrangements (FSAs) to take full advantage of the plans.
An FSA permits employees to set aside up to $2,650 in 2018 for qualified medical expenses. The FSA contribution is not subject to income tax, Social Security tax or Medicare tax. If the FSA plan permits, an employer may make a one-to-one match of the amount of each employee's contribution.
An FSA may be used to cover qualified medical expenses. These may include medical bills such as co-pays and deductibles that are not otherwise covered by your medical plan. Other qualified expenses may include dental, vision care or hearing aids.
An FSA has a use-it-or-lose-it provision. If you set aside amounts and have not used them by December 31, the remaining FSA balance is returned to your employer. However, if the FSA plan permits, an employee may carry forward up to $500 of unused funds to the next year.
Another FSA plan option is for the employer to permit an employee to use the plan-year funds until March 15 of the next year. An employer may select this option or the $500 carryover, but may not offer both.
FSAs are optional with the employer. Employees should check to determine to if an FSA is available for their company. If it is available, employees will need to make their funding election for 2018.
Published November 17, 2017